Columbus Loans & Home Mortgages

At the end of last week we received an email from our favorite loan officer. She told us that FHA changed guidelines for minimum credit scores required to ensure loans. Until now it was still possible to get Columbus loans with credit scores as low as 580. Fifth Third Bank was one of the few Columbus mortgage lenders that approved applications with scores below 620.

Now that has changed. If you have any application in, you can still close with a lower credit score before the end of October, 2009. All new applications fall under the new rule and need to show a 620 FICO score.

What does this mean for you as a prospective home buyer?

If your score falls between 580 and 620, and you planned to buy a house to take advantage of the first time home buyers tax credit as well as the low interest rates, you are out of luck. You won’t have enough time to improve your credit by 20, 30 or 40 points to qualify for a loan before the closing deadline expires. You may have a chance to buy a home with seller financing and still claim the tax credit – I will talk more about this option in another post.

For those of you with solid credit scores, now is the time to make an offer on one of the listed Columbus houses. You should be able to get FHA financing, if you meet the following criteria:

• You buy a personal residence as an owner occupant (up to 4 units)
• Your mortgage amount is below the FHA limit set for your county ($341,250 for Franklin County OH)
• You can come up with the required down payment of 3.5% of the purchase price (if you buy a HUD home you can get away with only $100 downpayment)
• You meet the minimum income requirements and can show 2 years of job history or tax returns, if self employed.
• Your credit score is above 620 and you didn’t have a bankruptcy for 2 years.
• Your new home appraises for or above the purchase price.

There a number of obstacles in the FHA loan approval process. However, an experienced loan officer can get it done in 30 days. Your property has to be in good condition. If it needs repairs you may be able to establish a repair escrow to cover these expenses – this is commonplace with HUD homes.

A good credit score is the key for getting Columbus loans approved by your lender. Take care of your credit score and the harsh lending environment will not effect your ability to get a Columbus home mortgage.

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